London’s top financial index closed at its lowest level for two months amid weakness across European trading.
Sainsbury’s was one drag on the FTSE 100 after the retailer was impacted by lower sales at its Argos business and general merchandise arm.
The FTSE 100 finished 45.56 points, or 0.56%, lower to end the day at 8,121.20.
Across the Channel, the main indexes on the continent dipped again despite bond prices steadying slightly as political uncertainty continued to unsettle the markets.
Axel Rudolph, senior market analyst at IG, said: “Despite the euro area inflation rate slowing to 2.5% year-on-year and the eurozone jobless rate holding steady at a record low of 6.4%, European stock indices continue to fall.
“A slightly higher-than-expected year-on-year core inflation reading of 2.9% and concerns regarding the second round of the French legislative elections on Sunday might be to blame.”
The Cac 40 in France ended 0.3% lower and the Dax index was down 0.75% at the close.
In the US, shares were shaky on the opening bell but then lifted higher in New York after robust vehicle delivery figures from Tesla.
Meanwhile, sterling recovered ground after US Federal Reserve chair Jerome Powell said that disinflation appears to have resumed.
The pound was up 0.2% at 1.267 US dollars and was up 0.23% at 1.181 euros.
In company news, shares in Sainsbury’s fell after it revealed a slowdown in sales growth and poor early summer weather impacted its Argos and seasonal ranges.
The supermarket group said total grocery sales lifted 4.8% over the quarter to June 22, although this was the slowest seen for many quarters as food inflation eased back significantly.
Shares in the business finished 2.87% lower at 250.4p at the close.
Shell was in the green as the energy giant confirmed it will pause building work on one of Europe’s largest biofuel plants following a slowdown in demand growth for the low-carbon fuelling method.
The firm, which also benefited from an uptick in oil prices, said the move will help to “control costs”.
Shares in the group were 0.42% higher at 2,869.5p.
ShoeZone was on a weak footing on Tuesday after the high street chain sold fewer shoes than expected between April and June and warned over profits due to bad weather and high shipping costs.
It finished 11.48% lower at 135p after the second reduction to profit guidance in recent months.
Catering giant Compass was knocked by a warning from French rival Sodexo that sales will be lower than expected in the third quarter. It finished down 1.38% at 2,143p.
The price of oil moved slightly higher on the back of hopes of improving energy demand across Europe and Asia.
A barrel of Brent crude oil was up by 0.17% to 84.44 US dollars as markets were closing in London.
The biggest risers on the FTSE 100 were 3i Group, up 59p to 3,045p, Croda, up 60p to 3,959p, BP, up 6.2p to 484.7p, Persimmon, up 17.5p to 1,389.5p, and Glencore, up 4.55p to 466.25p.
The biggest fallers on the FTSE 100 were Beazley, down 36p to 650.5p, BT, down 4.15p to 137.15p, Sainsbury’s, down 7.4p to 250.4p, United Utilities, down 28p to 958.8p, and Standard Chartered, down 19.6p to 712.6p.